The Securities and Exchange Commission (SEC) today announced settled charges against Austin, Texas-based Kershner Trading Americas, LLC, a privately held trading firm, for violating an SEC trading rule when it bought stock in 23 public offerings after selling the same stock . during a time period when the SEC rule prohibited such purchases.
The SEC’s decision finds that Kershner violated Rule 105 of Regulation M under the Securities Exchange Act of 1934 (“Rule 105”), which prohibits the short sale of an equity security during a limited period (generally five business days before from a covered public offering) and then purchase the same security in the offering, without exception.
The rule applies regardless of the trader’s intent and is designed to prevent potential fraudulent short selling prior to the pricing of covered offers.
The SEC order finds that Kershner violated Rule 105 by participating in 23 follow-on offerings that took place between February 2019 and June 2022, after she had short sold the same securities during the restricted period.
Pursuant to the SEC’s order, after learning of the Commission’s investigation, Kershner prohibited its traders from purchasing further shares in covered offerings.
If Kershner wishes to purchase equity securities in any future covered offering, Kershner agrees to take certain actions, including adopting, implementing and maintaining written compliance policies and procedures reasonably designed to prevent violations of Rule 105.
Without admitting or denying the findings of the SEC order, Kershner agreed to cease and desist from committing or causing violations of Rule 105 and to pay impairment of $593,375.76, prejudgment interest of $94,268.84, and a civil penalty of $3558 .